It Sounds Like A Broken Record
It Sounds Like A Broken Record
Trichet, in all his wealth of knowledge is now beginning to sound like a CD on repeat. “No Default, No Default…” and so it continues… Top economists are maintaining their stance on views that Greece will default. This, to them is a given. However, more worryingly for the Eurozone is their view that the single currency has a “smaller than evens” chance of surviving beyond the next four years. Last weeks groundbreaking deal struck by policymakers was seen as a resounding success. Yet, now the champagne and caviar has ceased a demonic hangover has surely set in giving way to talk of defaults, contagion and all out chaos on the continent.
Pound Sterling – UK Markets
When it comes to the UK at present I don’t know where to begin. It appears that just as we make a few baby steps in the right direction another bombshell lurks just behind the corner. This appears set to continue. Shadow chancellor Ed Balls came under fire yesterday after he was accused by George Osborne of putting Britain into a “Greek style trap”. This on the back of Ball’s deficit reduction mechanisms. Furthermore, the monster in the closet this week would appear to be GDP figures due to be released tomorrow that are set to reflect badly on the UK.
In the meantime, sterling has continued to ebb and flow its way to mid-table mediocrity. Our nation’s currency is almost unchanged since Friday against the US Dollar and euro but it should be noted that any unwanted surprises in tomorrows GDP figures could dent us further.
US Dollar – US Markets
Like Captain Hook’s arch nemesis, the ticking time bomb that is the US debt deadline appears to be getting louder. The bickering within the White House continued as Republicans failed to accept plans that would enable President Barack Obama to raise the debt ceiling prior to the August 2nd deadline.
Whilst I maintain my view that all will be resolved in time, I am beginning to chew my finger nails slightly. We should all be reminded that even once a plan is agreed, several days grace will be required to table legislation before a program can be implemented. It is worth a calm reminder that a US default would be catastrophic for the global financial system and British business secretary Vince Cable has branded “a few right-wing nutters” for putting the already fragile recovery at risk.
Euro – European Markets
As was initially suggested, Greece in the short term has done its best to gain the help required to avoid a disorderly default. However, long term a default still looks more than likely. Rating’s agency Moody’s has backed this up by cutting Greece’s credit rating another three notches from Caa1 to Ca. This just two notches shy of a default rating. Ironically, whilst this does not reflect well on Greece, by avoiding a messy default, the euro will look to benefit.
Other Currencies – Highlights
Following heinous acts of evil by who can only be described as a deranged individual in Norway, the Norwegian Krone slumped versus all 16 of its major peers. The bomb blast and subsequent shootings that have reported to have killed 93 people up to now has forced investors out of the krone causing the currency to decline.
The Singapore Dollar has seen daily trading rise by 14 percent since October. The currency which averaged a daily turnover of $278.4 billion in October now sees on average $314.2 billion traded through the markets on a daily basis. The nations GDP also increased by 9.3 percent in the first quarter from a year earlier.